Happy Sunday!

If you’re reading this, I hope you’re sitting down with a beverage in hand, your feet up, and you’re excited to dive into what makes for the perfect welcome or introductory offer.

Everyone is ready to hit the ground running as the new year starts. This is when larger advertisers have pulled back their ad dollars, publishers are pumping out less content as a result, and it creates a carpool lane for us digitally-native marketers to run ads more efficiently. In my newsletter, I always talk about ads, messaging, positioning, and the website or landing page... but it’s been a while since we dove into the last critical piece — the offer. 

Today’s email is going to cover everything about crafting the perfect offer. My goal is that you take one nugget from this email, incorporate it into your customer acquisition strategy, and see an uptick by Wednesday. But, before we get into that...

Vendor of the Week

Tondo Fulfillment — The best fulfillment partner for fast-moving goods.

Have you been thinking you need a new fulfillment partner going into the new year, or you at least want to get a quote to see how much better your pricing can be? Well, I highly recommend getting a quote from Tondo Fulfillment. 

So many of our clients and my portfolio companies work with Tondo for their fulfillment. Why? Because they get the best shipping rates I’ve seen from a 3PL, there are no BS fees, and they always make sure you’re taken care of.

Brands like BREZ, Hollow Socks, and Firebelly Tea all use Tondo. Fill out this form, jump on a 15 minute call, get a quote, and see how much money you’ll save this year alone. 

Click here to learn more about Tondo Fulfillment! 

Limited Supply

Did you hear the first episode of Limited Supply this season? I got the most positive feedback I’ve ever gotten... the most overrated things you can do as a brand (loyalty program, refer a friend, etc.) and the most underrated things (opt-in rate, creator marketing, etc.). Plus, I sat down with Isaac, the founder of Kanpai Foods, and we talked about what business ideas would make sense for brands.

Listen on Apple Podcasts or Spotify.

Crafting the Perfect Offer

Building the perfect offer is the best gateway drug to long-term customers for your brand. It allows you to drive sampling within a household efficiently, which becomes a win for you (sampling to new customers) and a win for the customer (getting a great deal to try new things).

Similar to the principles behind gamifying your cart and getting people to add more things to their cart (see examples on the sites we built for Salud and David), the perfect introductory offer encourages customers to experience your product and how it should be consumed. The main ingredients for a perfect welcome offer are:

  • Merchandising
  • AOV and discount
  • Free gifts with purchase

For today’s email, I will choose the #1 protein powder on Amazon, Orgain plant-based protein, to illustrate how I would craft the perfect offer for a new customer.

Merchandising

Merchandising is just a fancy way to say your presentation of products. If you have ever watched The Office, you might remember the garage sale episode where Dwight is organizing his beets on the table, putting his best beets at the front to attract people to his table, and then selling them the one from the back of the table. Why? Because good merchandising brings people in, it’s enticing.

For a new customer, I recommend figuring out what products drive the highest sell-through for net new customers. An easy way to figure this out is to see what customers are buying who come from your Meta prospecting ads (this is why it’s essential to use proper UTM parameters in your ads, so you can see this data within Shopify reports). The easiest way to do this is to export reports from Shopify, upload them into Chat GPT, and ask questions. 

Once you identify the best-selling product for net new customers, you want to focus on that. In the case of Orgain, that is their flagship plant-protein powder. 

When choosing the product, you want to ensure you have enough product for a household to sample. You should assume your products are going to a household of 4 people unless you are highly confident that your customer is a household of 1 or 2. For this reason, you want to have a variety of variants (colors, flavors, scents, etc), or just focus on the best-selling SKU — in this case, the chocolate protein powder.

Now that you’ve identified the main product to build your offer around let’s get to gifts and pricing.

Gifts

Adding gifts is one of the most straightforward levers for building a welcome offer. There are a couple main types you can add:

  • Other SKUs you have that aren’t best-selling but people are loving.
  • Complimentary products or trinkets to what you sell.
  • Digital products or subscriptions.

Other SKUs. In this case of Orgain, we have the protein powder as the main SKU, and the protein bars to add here are the additional SKUs. They are cheaper to ship than liquid shakes and likely have good margin profiles built in. You can choose a product from another collection or something that isn’t best-selling, but is on the rise. You can also choose to include sample sticks of another product like Orgain’s greens powder, in this scenario.

Complimentary products. Given that we’re selling a protein powder, a Blender Bottle (aka shaker bottle) makes for the perfect complimentary product. If you’re selling skincare, it might be a dopp kit. It might be a branded supplement organizer if you're selling a supplement. If you’re selling mushroom coffee, it might be a rechargeable brother.

Digital products. The best part of including a digital product in a subscription is that you don’t have hard costs associated to it. For example, Orgain is currently running a promotion to give you a month of Centr App (fitness/training app) with any purchase. That gives the customer a $29.99 perceived value, it probably costs Centr pennies to host an additional account on their server, and it helps Centr acquire a new customer. It’s a win for Orgain, a win for Centr and a win for the customer. The triple win is my favorite type of scenario.

Adding additional gifts here also allows you to put the perception of the discount on the gifts, not on the main flagship product you are selling.

AOV & Discount

From all my experience, what I’ve realized is that if you have a consumable product your discount sweet spot is around 20-30%. For a one-time purchase, it’s around 15-20%. Now, here’s the thing — you don’t NEED to just discount the main product you’re selling. In fact, I would recommend not doing that, and instead leveraging the retail value of the gifts you’re including to create the discount.

For example, with this offer, if we have:

  • Orgain Protein Powder — $37.99
  • Orgain Blender Bottle — $14.99
  • Orgain Protein Bar — $23.99
  • 1 month of Centr app (training app) — $29.99

In total, the value of this offer is $106.96. The app subscription for 1 month costs nothing to ship or to Orgain (since that’s customer acquisition for them). The bars are cheaper to ship since they’re lighter, and the bottle is a high-margin product. If you put this offer up for $59 for new customers, you could market it as 40% off. It’s 44%, but legally you cannot say 45%, and for the sake of simplicity, 40% sounds better.

This is now an enticing offer that allows someone to sample the best-selling product, get two gifts, and sample the protein bars that are on the rise for them. Because the order value of this offer is $59, it also follows the 1.5x AOV rule for new customer offers. I like to make sure the new customer offer is more expensive than the standard AOV (which I’m blindly assuming is ~$40 here), so that buying the protein powder alone isn’t going to give them sticker shock for subsequent purchases.

If you have any questions, please reply to them here. This can be confusing sometimes, but it’s also the biggest unlock for scalable customer acquisition.

That's all for this week

I know you likely have the day off tomorrow, but if you’re reading this email on a Sunday, I know you’ll be dabbling in some work. I hope today’s email gives you some inspiration to try something new. 

Put this offer into a landing page, couple it with some static ads, and test it out. Your goal should be creating an offer, getting to 100 new customers a day, then 250, 500, then 1,000. It’s all about playing with the different levers here, and once you crack the code, it’ll scale. 

It’s a new week and a short one, too, so I hope you get extra sleep tonight and have a fantastic upcoming week. I’ll see you next Sunday, same time, same place. If you have something I should write about, reply with it here, and I’ll buy you lunch if I write about it!

Thanks for reading :)